Swiss food group Nestle is selling an 8pc stake in L'Oreal to the French cosmetics firm for €6.5bn, loosening their 40-year partnership and allowing both firms to boost earnings per share.
However, Nestle said it remained committed to the maker of Garnier shampoo and Lancome creams for the "long haul", dampening speculation it might sell its remaining 23pc take anytime soon. Nestle Chairman Peter Brabeck said the Swiss firm planned to stay a major investor in L'Oreal, which on Monday posted forecast-beating quarterly sales.
"I do not see this as a first step of leaving L'Oreal . . . not at all," he said. "We are in here for the long haul".
The Swiss firm has been a major shareholder in L'Oreal since 1974, when L'Oreal heiress Liliane Bettencourt sold around half her stake to Nestle for fear L'Oreal would be nationalised.
Nestle and Bettencourt promised not to sell their stakes without first offering them to the other. With that agreement due to expire on April 29, 2014, speculation had been mounting the two firms would strike a deal before Nestle became free to sell its stake elsewhere.